Mti Wireless Regulatory News (MWE)

3 Mar 2008 07:01

MTI Wireless Edge Limited03 March 2008 MTI WIRELESS EDGE LTD FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 MTI Wireless Edge Ltd., (ticker: MWE) ('MTI' or 'the Company'), a market leader in the manufacture of flat panel antennas for fixed wireless broadband, today announces its audited full year results for the year ended 31 December 2007. 2007 Highlights •Revenues increased by 16% to $19m (2006: $16.4m) •Gross profits up 15% to $8.4m (2006: $7.3m) •Operating profit improved by 13% to $3.7m (2006: $3.3m) •Profit before tax up 26% to $5m, (2006: $3.9m). The PBT without warrants effect* was $4m, an increase of 1%. •Net Profit of $4.6m ($3.7m without warrant effect*), representing EPS of 8.63c, an increase of 22% and 12%, respectively (2006: $3.8m, 7.7c). •Net cash generated from continuing operations reached $2.6m; Net cash at the year end of $14.6m, equivalent to 13.75 pence per share; •Dividend of 1.85c per share and a $1.5m share buy back •Strong growth in military antennas including penetration into North American market. •Strong penetration to Indian WiMax market * As announced on November 7th, 2007 the 3,730,631 warrants provided to certaininvestors should be recorded at their fair value as a liability in eachfinancial reporting statement and marked to market by adjusting the liabilityagainst financial income or expenses as applicable Dov Feiner, CEO of MTI Wireless Edge, commented:"2007 was a challenging year aswe saw increased competition in the WiMax market. Nevertheless, we were able tomaintain our 25% market share based on the quality of our products and our longterm relationships with key customers as well as penetration into newgeographical markets, such as India. Having identified India as one of thefastest growing markets in wireless communications, we have taken the decisionto establish a manufacturing facility in that country, which the managementintends to have operational in the near future. "Our military segment almost doubled in 2007 due to a naval contract win, andpenetration into the North American market. Since the start of the new financialyear we have seen recurring demand from the North American market, and furtherorders from the naval contract. "Looking ahead, management is confident about our market position in both fixedbroadband wireless access and in military. We also have new initiatives, such asRFID and our intended Indian operation and continue to look for additionalopportunities. All of this should continue to deliver contributions to bothrevenues and profit over the next 12 months whilst the Company continues to bemindful of the appreciation of the Shekel against the US Dollar. Overall, weexpect to continue to make good progress in 2008." Contacts: MTI Wireless Edge +972 3 900 8900Dov Feiner, CEOMoni Borovitz, Financial Director Blue Oar Securities +44 20 7448 4400 Shane GallweyMatthew Marchant Daniel Stewart & Co +44 20 7776 6550 Lindsay Mair Threadneedle Communications +44 207 936 9605Graham HerringJosh Royston About MTI Wireless Edge MTI designs and manufactures flat panel antennas, largely supplied tointernational OEMs of fixed broadband wireless access systems. With over 30years of technical 'know-how', flexible high volume manufacturing capabilitiesand low failure rates, MTI's antennas now comprise approximately 25% of theglobal fixed broadband wireless antenna market. In addition, the Company hassuccessfully developed products for new commercial applications as wirelesssystems become increasingly prevalent in new markets. Chairman's Statement I'm pleased to report on a successful set of results for the financial yearended 31 December 2007, achieving another year of continued revenue and profitgrowth. 2007 was a challenging year as we saw increased competition in the WiMax market.Nevertheless, we were able to maintain our 25% market share based on the qualityof our products and our long term relationships with key customers as well aspenetration into new geographical markets, such as India. Having identifiedIndia as one of the fastest growing markets in wireless communications, we havetaken the decision to establish a manufacturing facility in that country whichthe management intends to have operational in the near future. The business enters 2008 in good financial health and with excellentopportunities for further growth. Nevertheless, the Israeli Shekel hasstrengthened sharply (~7%) against the US dollar in the first 2 months of 2008,which results in some additional costs to our business. This is in addition to a10% change in the exchange rate in 2007 for which we were able to adjust. Strongsales growth to our military customers and the increased market penetration inNorth America which we achieved in 2007, promises a strong year for thisdivision. Increased demand from our RFID customers, together with several earlydeployment stages provides us with a wider product offering for 2008, althoughFixed Broadband Wireless Access (FBWA/WiMax) will continue to be dominant as wewitness demand increasing for this application. The Board has decided to distribute a dividend of 1.85 cents per share as westrongly believe it is in the interest of shareholders to receive a yearly yieldon their investment, while the company is managing its growth not only in termsof profits but also in cash generation. The dividend will be payable on 4 April2008 to shareholders on the register as of 14 March 2008. We believe strongly in the success of the Company as evidenced by the boardapproval of a $1.5 million share buyback program. We expect to initiate thestock buyback when our window opens this quarter. Management is excited aboutour prospects and remains committed as ever to the continued growth of both ourcompany and shareholder value. I would like to complement our employees on this achievement and thank each andeveryone for their dedication and creativity that had enabled our improvement inthe business. I further would like to acknowledge with thanks the employees'families for their continued support. Zvi BorovitzNon Executive Chairman Chief Executive's Review On behalf of management, I am delighted to report on a strong year of revenuegrowth for the company. Revenues for the year increased by 16% to $19m, withProfit Before Tax improving by 26% on 2006 to $5m. The Company remains focused on the growth of the business and on furtherdeveloping its position as a leader in the antenna markets for fixed wirelesscommunication. Maintaining our significant market share of 25% in the fixedbroadband wireless access (WiMax) market is achieved through solid and stableleadership positioning and through strategically managing the Company's growthin each of its fields of activities. Once again we have succeeded in delivering not only top-line growth, butcomprehensive, cross-company, managed growth in terms of geography, technology,range of competences and customer base within our selected markets. In 2007 we have seen more deployments of systems in the field coupled with pricepressure. We have shipped over 600,000 antennas (50% growth over 2006) and inorder to continue our growth without impacting upon our margin, we have decidedto open a manufacturing facility in Asia. The necessary processes began in late2007 and we hope to announce that the facility is fully functional by mid 2008. Our aim is to strengthen the Company's leadership position within its chosenmarkets of operation, as well as increasing our geographical reach, thusmaintaining our status as the partner of choice for antennas. In 2007, we wereable to achieve these goals by gaining some additional original equipmentmanufacturer ("OEM") agreements in new areas. In the past year the 802.16 standard (known as WiMax) has become a leadingtechnology for future deployment of mobile wireless communication. Leadingcompanies such as Sprint, Clearwire, Alcatel-Lucent, Nokia, Siemens, Motorolaand Intel have chosen Wimax as their solution for future wireless services andsolutions for 4G. This gave a strong push to the deployment of fixed Wimaxsolutions and will provide another area of opportunity for MTI in the future,when mobile Wimax starts deployment. MTI is developing the base station antennasfor such Mobile WiMax applications to ensure that MTI fully benefits from thisgrowth when it occurs. As we have previously stated, although RFID is only in its initial stages, westrongly believe in the potential of this market. Therefore, we have made someimportant steps to position the Company as a key antenna provider, includingpenetration to Tier 1 customers, participation in key trials and the provisionof a full range of reader's antennas for portals, forklift and near fieldantennas. We foresee 2008 as a next step in key trials and plan to be involvedto ensure that MTI is well positioned to enjoy success once this market entersthe full deployment stage. Our military segment almost doubled in 2007 due to a naval contract win, andpenetration into the North American market. Since the start of the new financialyear we have seen recurring demand from the North American market, and furtherorders from the naval contract. Looking ahead, management is confident about our market position in both fixedbroadband wireless access and in military. We also have new initiatives, such asRFID and our intended Indian operation and continue to look for additionalopportunities. All of this should continue to deliver contributions to bothrevenues and profit over the next 12 months. Nevertheless, we have experienced adramatic change in the Israeli Shekel Vs. the US dollar which impacts upon ourdollar costs (mainly for salaries) which will clearly have an impact on ourprofitability, should the exchange rate stay at current levels. As always, our pipeline orders only reflect several weeks, but the forecast forthe year is built from a combination of long term relationships with our leadingcustomers and the global expansion of Wimax systems, and is underpinned by somelarge scale tenders in which we are currently involved. I would like to finalize my review by thanking the employees and their familiesfor the hard work, dedication and support. It is their creativity, perfectionismand implementation that led MTI to its position in the market and we see them asthe key to our success. Dov FeinerChief Executive Officer M.T.I Wireless Edge Ltd.Income statement for the year ended 31 December 2007 Year ended December 31, 2007 (*) 2006 $'000 $'000 ------- -------- Revenues 19,035 16,463Cost of sales 10,605 9,159 ------- --------Gross profit 8,430 7,304 Research and development expenses 1,415 1,121Distribution costs 1,946 1,783General and administrative expenses 1,340 1,088 ------- --------Profit from operations 3,729 3,312Finance cost 94 102Finance income 1,369 746 ------- --------Profit before tax 5,004 3,956 Tax on profit from ordinary activities 364 161 ------- --------Profit for the year 4,640 3,795 ======= ========Earnings per shareBasic (dollars per share) 0.0863 0.0770 ======= ========Diluted (dollars per share) 0.0853 0.0741 ======= ======== (*) Restated - see note 2. M.T.I Wireless Edge Ltd.Statement of changes in equity for the year ended December 31, 2007 *Additional Share paid in *Retained capital capital earnings Total $'000 $'000 $'000 $'000 Balance at January 1, 2006 2 7,561 374 7,937 Changes in equity for 2006: Profit for the year - - 3,795 3,795 Issuance of share capital*** ** 79 - 79 Share capital as a result of split 80 (80) - - Additional capital raised in AIM listing **** 33 7,385 - 7,418 Dividend distributed - - (2,000) (2,000) ---- ------ ------ ------ Balance at December 31, 2006 115 14,945 2,169 17,229 Changes in equity for 2007: Profit for the year - - 4,640 4,640 Dividend distributed - - (898) (898) ---- ------ ------ ------ Balance at December 31, 2007 115 14,945 5,911 20,971 ==== ====== ====== ====== * Restated - see note 2.** Less than 1 thousands dollar.*** Exercise of employee's warrants to shares, grant of shares to directors and warrants to investors.**** Net of issuance expenses in the amount of $1,631 thousand. M.T.I Wireless Edge Ltd.Balance sheets As at December 31, As at December 31, 2007 2007 * 2006 * 2006 $'000 $'000 $'000 $'000ASSETSNon-current assets: Property, plant and equipment (PPE) 1,522 1,435 Goodwill 406 406Long-term prepaid expenses 55 32Deferred tax assets 95 69 ----- -----Total non-current assets 2,078 1,942 Current assets:Inventories 2,253 1,724Trade and other receivables 6,369 5,360Other financial assets 11,203 11,133Cash and cash equivalents 3,370 2,167 ------ ------Total current assets 23,195 20,384 ------ ------TOTAL ASSETS 25,273 22,326 ------ ------LIABILITIESNon-current liabilities: Financial liabilities - 22Employee benefits 266 231 ------ -----Total Non-current liabilities 266 253 Current Liabilities:Trade and other payables 3,222 3,267Tax liability 494 250Other financial liabilities 22 87Liabilities due to warrants 298 1,240 ----- -----Total current liabilities 4,036 4,844 ----- -----Total liabilities 4,302 5,097 ----- -----TOTAL NET ASSETS 20,971 17,229 ====== ====== (*) Restated - see note 2. M.T.I Wireless Edge Ltd.Liabilities and shareholders' equity As at December 31, As at December 31, 2007 2007 (*) 2006 (*) 2006 $'000 $'000 $'000 $'000 Capital and reserves attributable to equity holders of the companyShare capital 115 115Additional paid-in capital 14,945 14,945Retained earnings 5,911 2,169 ------ ------ ------ ------TOTAL EQUITY 20,971 17,229 ------ ------ (*) Restated - see note 2. M.T.I Wireless Edge Ltd.Cash flow statement for the year ended December 31, 2007 For the year For the year ended December 31, ended December 31, 2007 2007 (*) 2006 (*) 2006 $'000 $'000 $'000 $'000 Operating Activities: Net profitfrom ordinary activities 4,640 3,795 Adjustments for:Depreciation 309 281Gain from short-term investments (104) (340)Deferred tax assets (26) (13)Issuance of share capital - 79Decrease in fair value of liabilities due to warrants (942) (172) ----- -----Operating profit before changes in working capital and provisions 3,877 3,630 Increase in inventories (529) (716)Increase in trade receivables (1,094) (1,749)Decrease in other accounts receivables for short and long term 62 43Increase (decrease) in trade and other payables (20) 1,066Increase in tax liability 244 169Increase in employee benefits 35 57 ----- ----- (1,302) (1,130) ------ -------Cash generated from operations 2,575 2,500 ====== ======= Additional InformationCash paid during the year for: Income tax 181 11 ====== ====== (*) Restated - see note 2. M.T.I Wireless Edge Ltd.Cash flow statement for the year ended December 31, 2007 (Cont.) For the year For the year ended December 31, ended December 31, 2007 2007 2006 2006 $'000 $'000 $'000 $'000 Cash flows from operating activities brought forward 2,575 2,500 Investing Activities: Sale (purchase) of short-term investment 34 (10,793)Purchase of PPE (421) (263) ----- ----- (387) (11,056)Financing Activities: Dividend paid to shareholders equity (898) (2,000)Issue of ordinary shares - 8,830Repayment of bank borrowing (87) (87) ----- ----- (985) 6,743 ----- -----Increase (decrease) in cash and cash equivalents 1,203 (1,813) ===== ====== For the year ended December 31, 2007 2006 $'000 $'000Non-cash activities: Purchase of PPE against trade and other payables 41 66 ===== ===== 1 Basis of Preparation The principal accounting policies adopted in the preparation of the financialstatements are set out below. The policies have been consistently applied to allthe years presented, unless otherwise stated. These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRSs and IFRIC interpretations) issued by theInternational Accounting Standards Board (IASB). The financial statements havebeen prepared under the historical cost convention, as modified by therevaluation of financial assets and financial liabilities at fair value throughprofit or loss. 2 RestatementThe Company has restated the financial data for the period ending 31.12.2006 inorder to retroactively reflect the change made in the accounting treatment ofwarrants granted to certain investors. The restatement relates to the 3,730,631 warrants (the "Warrants") issued tocertain investors. These Warrants contain an option to be exercised on a"cashless" basis (allowing the investors to get less shares but with no paymentfor the exercise, resulting in a lower dilution to existing shareholders). TheseWarrants should have been recorded at their fair value as a liability instead ofCompany's equity on the IPO date, and thereafter in each financial reportingstatement be marked to market by adjusting the liability against financialincome or expenses as applicable. A. Following are the effects of the restatement on the balance sheet items (in US$ thousands): As of 31.12.2006: Prior to the restatement Net change Following the restatement Liabilities due to warrants - 1,240 1,240Additional paid-in capital 16,357 (1,412) 14,945Retained earnings 1,997 172 2,169 B. Following are the effects of the restatement on the statement of operations items (in US$ thousands): For the period ended 31.12.2006: Prior to the restatement Net change Following the restatement Financial (income)expenses, net (472) (172) (644)Net profit 3,623 172 3,795 C. Following are the effects of the restatement on the earnings, per share: For the period ended 31.12.2006: Prior to the restatement Net change Following the restatement Basic 0.0736 0.0034 0.0770Diluted 0.0708 0.0033 0.0741 3 Turnover by Geography The Company's secondary reporting format for reporting segment information isgeographic segments. ---------------- External revenue by location of customers ---------------- -------- 2007 2006 -------- -------- $'000 $'000 -------- -------- Israel 10,012 7,996North America 4,374 3,738Europe 3,358 3,548Asia 1,172 1,029Other 119 152 ------ ------ 19,035 16,463 ====== ====== 4 Earnings per share 2007 2006 --------- --------- $'000 $'000 --------- --------- Earnings used in basic EPS 4,640 3,795Earnings used in diluted EPS 4,640 3,795 Weighted average number of shares used in basic EPS 53,779,998 49,262,202 Effects of:shareholders and underwriters share options 625,035 1,920,376 ------- ---------Weighted average number of shares used in dilutedEPS 54,405,033 51,182,578 ========== ========== Basic net EPS 0.0863 0.0770 ====== ======Diluted net EPS 0.0853 0.0741 ====== ====== 5 Dividends 2007 2006 --------- --------- $'000 $'000 --------- --------- Dividend of 1.67 (2006 - 5.2) cents per ordinary share proposed and paid during the year relating to the previous year's results 898 2,000 ==== ===== The directors are proposing a dividend of 1.85 cents per share totaling US$ 995thousands. This dividend has not been accrued at the balance sheet date. 6. The Annual Report and Accounts The annual report and accounts for the year ending 31 December 2007 will beposted to shareholders on or before end of March, 2008 and copies will beavailable from the offices of Blue Oar Securities, 30 Old Broad Street, LondonEC2N 1HT. This information is provided by RNS The company news service from the London Stock Exchange